A capacitor clamped voltage source inverter for active power filter operation under the balance and unbalance conditions is proposed to suppress current harmonics and compensate the reactive power generated from the nonlinear loads. Two control loops are used in the control scheme to achieve harmonic and reactive current compensation and to regulate the inverter dc side voltage. In the adopted inverter, the neutral point voltage is compensated by a voltage compensator to obtain the balanced capacitor voltages on the dc side. The balanced and sinusoidal line currents are drawn from the ac source under balanced and unbalanced conditions. The feasibility of the proposed scheme is confirmed through experimental results.